Is it too soon to seek expert pension advice?

louby40

I'm 49. Work full time as a teacher. Plan to retire at 60. So 11 years to go.

My mortgage, 5 yr fixed rate ends in 2020 and I then need to find another deal. I will have 15 years left on my mortgage . I need to start overpaying my mortgage ( I do already but only by about £400 a year to round up the monthly amount) as I want my mortgage to have finished when I retire. I'll have approx £80k left on my mortgage. House worth about £200k currently.

I intend to downsize at 60 to free up money in order to fill the gap until the second part of my teachers pension kicks in at 67.

I'm not really in a position to overpay my mortgage yet as still have teenagers at home (neither intend to go to university) but I also have home improvements to do. By 2020 I should be able to overpay considerably more.

Do I need to speak to a financial advisor of pension advisor now in order to start planning or wait closer to May 2020 when my fixed rate comes to an end?

Many thanks for your advice

jerrysimon

What is your current projection for your monthly spend, backup fund requirements etc when you retire ?

From that you should be able to work out how you are doing with your pension and if you have sufficient to meet monthly expenditure when you retire.

Also have you got a state pension estimate off the HRMC web site yet ?

You could get an IFA involved but it will cost money. Its not that hard to start by figuring out what you require if you read this forum and then get IFA if you think you then need it. Also pension estimates from your provider should help.

Note downsizing may not be as lucurative as you think after you take into account how much it costs dependant on your current house size and where you propose to move to. If you are planning to sell you property wouldn't it be better to pay more money into a pension and get tax relief rather than try and pay off the mortgage ?

Linton

Emergency fund £893/£1000. Christmas savings £200/£600 Car maintenance £197/600
Chip savings £143 TOTAL savings = £1433
Kitchen July 2017 £12,493 JAN £8993
Barclaycard £773
Car loan £2296 Mortgage £93792
TOTAL DEBT (with mortgage) = £105,854 (without mortgage) = £12,062

Assuming this actually represents your financial situation......

Sorry to be somewhat blunt you do need to be realistic.....

I dont think an IFA will help much at the moment as it would appear that you are in debt with virtually no savings and therefore very little flexibility. An IFA can help you use your money to best effect, but with little spare money there isnt much that can be done. With only 11 years to go it would seem rather late to plan retirement as there is very little time to build up a significant amount of money to pay off your mortgage and to provide extra income beyond what you will get from your pension. I agree with jerrysimon that improving the situation by downsizing may be difficult unless perhaps you are prepared to accept a very significant drop in standard of housing.

I further agree with jerrysimon that you need to seriously plan your finances for retirement:
- what will your income needs be over time: a good start is what your needs are now minus the things that wont be relevent by the time your retire.
- what will your income be over time
- what are the shortfalls over time
- how will you fill them: perhaps you could consider part time work rather than downsizing.

AnotherJoe

It's not clear to me what a financial adviser would do that you can't do yourself very easily..

You've already mapped out the dates and events so all you need do is put numbers into them and see what happens.

As Jerry says, downsizing sounds overoptimistic

Also, are you a high rate taxpayer ?

Dox

It's rarely too soon to seek expert pension advice, but as others have said, you don't seem to have much flexibility to add to your pension pot, so not sure how advice - however expert - would change that position. Unless your house is going to release substantial funds when you downsize, stopping work at 60 looks optimistic in the extreme.

Browntoa

You've not mentioned a pension lump sum on retirement at 60 , could this be enough to clear your mortgage and leave a lump sum to top up your income until you get the 2nd pension.

Leaving you the option to downsize later.

justme111

I am not even sure whether the service that OP is asking for exists. IFAs organise investments - I have doubts they do financial planning including downsizing, occuoational pensions, expenses planning etc. Or do they?

AnotherJoe

I'm sure they would for a fee but really it isnt needed is it. Its not as if there are tons of optiosn and a difficulty juggling teh massive investment portfolio.

A very small spreadsheet or indeed back of an envelope would be enough, and as someone else posted, a part time job is a lot more realistic to bridge the gap than downsizing unless OP buys a croft in the wilds.

Brynsam

justme111 wrote: »

I am not even sure whether the service that OP is asking for exists. IFAs organise investments - I have doubts they do financial planning including downsizing, occuoational pensions, expenses planning etc. Or do they?

Of course they do, if that's what the client wants and needs. Not sure it would help much here, but that's for OP to decide.

Happier_Me

Take a look at this thread:

https://forums.moneysavingexpert.com/discussion/2146737

For you to calculate any gaps in your pension planning, you need to work out the amount of income you require in retirement and compare this to the amount of income you are on target to receive (in teachers pension at 60/67, state pension and any other pension savings you have accumulated outside of the teachers pension). You could find your current pension will not give you the income you need at 60 even after removing work, child and mortgage related costs. If this is the case you will need to save more or work for longer.

You have identified one issue and that's the fact your mortgage runs beyond your preferred retirement date, but it appears you may also have some debts to shift too. If that's the case get yourself over to the debt free wannabe board, this forum will help you reduce costs to clear your debts and build up a decent emergency fund.

By my reckoning you will need to clear any remaining mortgage in nine years (from 2020 to 2029) in order for you to be mortgage free by the age of 60. Using a mortgage calculator will give you a good idea as to how much extra per month you will need to find to clear your mortgage in that time.

louby40

Thanks for all of your replies. As always your advice needs a lot of thought.

I'm a teacher, nowhere near higher tax rate! Do you actually know how much an average teacher earns??? It's not much unless you have management responsibilities - which I don't or ever intend to.

I live in a 4 bedroom, 3 storey house in the Midlands. I won't need 4 bedrooms by the time I retire and I can buy a 2 bed terrace in my area for about £90-100k, thus releasing £100k approx. Not everyone lives in the wealthy, leafy south!

By 2020 I will have over £1k a month free income because my debts will have gone.

Sadly after a divorce and then a subsequent failed relationship I find myself in a worse financial position than I had hoped at 49. I think you will find that there a lot of women in similar (& worse) positions to me.

I certainly don't want to work partime. Apart from the years I studied for my degree I've been working full time since I was 18. I want to enjoy my retirement.

I know the Wesleyan are offering financial/retirement planning for teachers. That may be the route I need to follow for further advice.

Thanks again.